The Chinese road to capitalism: A study of private economy in a rural town in the People's Republic of China

This is a study about the grassroots private economy in modern China. The author examines private business in the broad institutional context including economic institution, political structure, and social inequality. The data for this research came from interviews conducted in a small rural town in central south China. It has been found that both government and family play very important role in the creation and further development of small private business. Compared with government, family is more active both in the creation and in the further development.; China's partial reform created three submarkets within the free market--illegal free, regulated free, and unregulated free submarkets. The three parts of free market operating along with state and gray market. Both public and private enterprises were segregated in different submarkets. The majority of private enterprises were operating in the unregulated free market. The differentiated market environment affected the operation of both public and private firms.; It has been found that there were two kinds of economic differentiation developing as the grassroots private enterprises grew up. One was the income gap between current cadres and successful entrepreneurs. The other was the income gap between state employees and rich entrepreneurs. This research concludes with a theoretical chapter about the class transformation in China since 1949. It has argued that state intervention is more important than industrialization in structuring class relation in state socialist countries. It has maintained that there were two basic classes: redistributor and producer and one periphery class of part-time cadres in China from 1949 to 1979. The most fundamental change begun by industrialization and marketization during the market reform period continues to be the transformation of "producer class" and "periphery class". The ruling class under state socialism remains in power and constitutes "cadre class" during market reform period.